Once more into the breech! I actually enjoy this discussion/argument and never really get too tired of it.
One of our big problems in these discussions is separating the definitions for "folk song" from definitions of "folk singer". I would hazard a guess that most of us are well-educated (whether formally in school or well-read and intelligent), middle-class people who have a love for older styles of music and song. We ourselves tend toward a definition of "folk song" that describes the music that came out of a particular community tradition and was passed down through the years orally or instrumentally among members of that community.
And there's the rub. We love this music, we think the tradition is important, we think the songs are wonderful, but we are NOT and never can be real members of the communities from which it came.
I am not Irish, but I love Irish lyric songs. I have never worked on a sailing ship for 5 years voyage, needing to use shanties to make me stay in the rhythm of my work - but I love the songs. I am not black, I didn't grow up within the culture; but I love singing St. James' Infirmary. Most of the songs we love to sing and want to perpetuate are from cultures outside our own in one way or another.
A lot of the confusion in the arguments in these threads arises from this distinction between the material and the people singing it. If I learn a ballad from Peacock's "Songs of the Newfoundland Outports", how is that different than my learning "Cheap Is How I Feel" from the Cowboy Junkies? The song in Peacock was collected from a member of a particular community by an outsider, printed in a book, and then learned by me, another outsider. When I sing it, I have no idea what the original source sounded like. Is the song the way I sing it still a folk song? I learned the Cowboy Junkie song from a recording by its author. I know what it's supposed to sound like, I learned it by rote from the recording, listening to her sing it (today's equivalent of oral tradition), and I am a member of the "community" that this song was created for (young-to-middle-aged depressed females). Is this more truly a folk song?
To hit a greyer area, suppose a young member of an modern old-time band (good oxymoron, eh) learns a song from a CD re-release of one of Charlie Poole's commercial recordings. Did Charlie Poole write it, or if not, is his particular version unique (they usually were...) Is this a traditional song? Is it a folk song? Charlie Poole wasn't passing this song on to future generations on his back porch, he was recording it to make a few bucks. However, it probably evolved from a song he DID sit around playing with other members of his community just for fun. Does this change things?
I am just playing Devil's advocate here, a bit. I do believe that there is a body of traditional songs and music that we need to preserve. I also believe that a portion of that work probably started out as a "commercial" creation of a singer/songwriter of its day. Because the means of propagating songs were so much slower in the past, Darwinian selection took a hand, and only the strongest, best crafted, most memorable songs survived.
This means of selection is diluted today by the more widespread broadcast of music on the air and by commercial recordings, but over the years, people will still be singing the best songs of today's songwriters, whether they're classified as "Folk", "Rock", "Reggae" by record dealers (Digression: a friend's son just released a CD of hammered dulcimer tunes. On it was the instruction "File under New Age/Celtic". Huh?!?)
We, as singers and instrumentalists, will learn the songs and tunes that most strongly attract us for one reason or another. We are truly fortunate to have the opportunity to learn songs from outside our own narrow community (Ballads of the DC Suburbs doesn't really grab me, ya know?) and to sing them with the joy they give us, and thus help preserve them for others. I wish there was a way to present them to a wider audience (extend the range of the species, as it were). But remember, widening the gene pool always leads to genetic variation. Pockets of static inbreeding will remain, but diversification is needed if the species is to survive; that's the way evolution works (trust me, I'm a biologist). In the words of British SF author John Wyndham (stolen by Jefferson Airplane) "Soon you'll achieve the stability you strive for, in the only way that it's granted, in a place among the fossils of our time...Life is change - how it differs from the rocks."
So have a bit of tolerance for the us folk-rockers playing the Albion Band at loud volume (an example of hybrid vigor). Have pity for the singer-songwriter whose angst-laden solo screed can never be reproduced by anyone else - don't worry, it won't be! Do your bit to get the traditional repertoire you treasure off the Endangered Songs List by playing or singing it, or encouraging your local folk club to book those that do, or clamoring for public radio or air time in your area for the treasure-trove of early recordings now being re-released. You probably won't convert the crowd that listens to "The Beastie Boys", but people who listen to some of today's alternative rock and, yes, the dreaded singer/songwriters, may actually find they, too, enjoy Almeda Riddle or Joseph Spence or Victoria Spivey or Dock Boggs...